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Saturday, October 30, 2010

Organizational Modularity: Inter or Intra?

I find the new (to me) concept of business platforms and the modular organization intriguing, but puzzling. While I understand the idea in theory, I find myself struggling to actually distinguish in practice between modular (at the business level) and conventional organizational structures such as functional or divisional. In examples I've come across that cite organizational modularity, it is in all cases a kind of faux organizational modularity that is simply an extension of the modularity of products.

While mulling over this, I recalled last summer's discussions about SAP's ecosystem. To me, this is a more cut and dried example of organizational modularity (although in this case the "organization" is larger than just a single company). The boundaries are clearly defined, there are definite interfaces between modules (companies), and each module functions as a black box to other modules. Modules are unconcerned about implementation details within other modules, so long as there exists a consistent interface.

So, is true modularity only inter-firm? Or does anyone have good, real examples of organizations that are truly internally modular?

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